Tag: buyers

Taylor Wimpey España will Launch 6 New Developments in H1 2019

7 December 2018 – Eje Prime

Taylor Wimpey is going to continue betting on second homes in Spain. The British property developer is going to launch six new developments in the country during the first half of 2019. The projects will contain 330 homes in total and will be located in three main areas: the Balearic Islands, the Costa del Sol and the Costa Blanca.

The real estate company, which celebrates its 60th anniversary this year, will start work on the three projects in the Balearic Islands, two on the Costa del Sol and a sixth on the Costa Blanca next year. “As always, our priority is to look for locations on the beachfront with access to golf facilities”, explained the company in a statement.

Specialising in international buyers, Taylor Wimpey España has received reservations from 37 different nationalities this year. Of all the countries, Germany stands out, where 27% of its clients have come from, and the United Kingdom, which has accounted for 12% of all the reservations made.

With more than 6,000 homes constructed over its six-decade history, the property developer is listed on the London Stock Exchange and undertakes its developments using own funds, a fact that “influences” buyers, according to Marc Pritchard, the company’s sales director. “For buyers, it is a guarantee of the development’s success since the investment is not affected by possible fluctuations in the market”, said the executive.

In 2018, Taylor Wimpey arrived in Sotogrande as an extension of its presence on the Costa del Sol, as revealed by Eje Prime. In the four months since its project Pier Sotogrande has been on the market, the property developer has managed to obtained reservations for 30% of the 56 homes that will make up the promotion.

Original story: Eje Prime

Translation: Carmel Drake

Ghost Towns Still Haunt Spain in Property Rebound a Decade After

25 November 2018 – Bloomberg

Juan Velayos’s biggest headache these days is getting licenses fast enough to hand over new homes such as the upscale condos his company is building in the northern suburbs of Madrid.

Less than 60 miles away, Ricardo Alba’s neighborhood tells a different story about Spain’s property market. The fencing instructor is one of only two occupants at a block of apartments whose development was frozen in its tracks when banks pulled the plug on credit.

“The real estate sector’s recovery in Spain is developing at two clearly different speeds,” said Fernando Rodriguez de Acuna, director of Madrid-based real-estate consultancy R.R. de Acuna & Asociados. “While one part of the country is consolidating the recovery of the sector and even expanding, another part of the country is stagnating and is showing few signs of returning to pre-crisis levels in the medium- and long-term.”

A decade after the financial crisis hit, Spain’s real estate recovery is a tale of two markets. Key cities and tourism hot spots are enjoying a fresh boom, fueled by interest rates that are still near historic lows, an economic recovery and a banking system that’s finally cleaning up its act. Private equity firms such as Blackstone Group LP are picking up once-toxic assets worth tens of billions of dollars and parsing out what’s still of value, often using their playbook from the U.S. real estate recovery to convert properties into rentals.

But travel a little beyond the bustling centers, to the outskirts of smaller villages, and ghost towns still litter the landscape — once ambitious developments, often started on agricultural land that was converted into building lots just before the crisis hit. They still stand half-finished, unable to find a buyer.

The “Bioclimatic City La Encina” where Alba began renting an apartment two months ago is one such development. Situated on the edge of the village of Bernuy de Porreros, about 10 kilometers (6 miles) from Segovia, it promised to be Spain’s first environmentally-friendly town, providing solar energy and recycled water for 267 homes, comprised of two-, three-, and four-bedroom chalets and apartments. A faded billboard speaks of the dreams that were sold, including communal swimming pools and gardens for residents who would “live… naturally.”

Today, only about a dozen of the homes are occupied. One street has finished homes but half have their windows bricked up to discourage break-ins, locals said. Alba does have solar panels heating his water, but his electricity comes from the local network. On the far side of the development, trees sprout out of the middle of a street that was never paved. Brightly-colored pipes and cables protrude from the ground. Bags of plaster on a pallet have long hardened.

Spain’s housing crash was fueled by a speculative frenzy combined with loose restrictions and corruption that allowed plots of farmland in rural villages to be converted to feed a demand for homes that never truly existed, said Velayos, who is chief executive officer of Neinor Homes. At the height of the boom in 2006, authorities approved 865,561 new home licenses when even in an economic boom demand is no greater than 250,000 homes, he says.

Banks were handing out loans to developers who had little to lose if a project didn’t find a buyer because the money wasn’t theirs. The result was an almost total collapse of the market and close to $200 billion of soured assets.

About half of them were bought in 2012 by Sareb, a bad bank set up by the government to help lenders. Sareb spent about 50 billion euros to acquire assets that were once valued at twice that amount, mostly loans to developers and real estate. Among the latter are also 97 of the 267 properties at La Encina. None of them are currently for sale as Sareb works through legal issues and construction of many isn’t finished.

Other assets were picked up by deep-pocketed investors such as Blackstone, which has 25 billion euros invested in Spain, according to Claudio Boada, a senior adviser at the firm. The New York-based company — the world’s largest private markets investor — is doing what it did at home after the financial crisis: renting out homes instead of selling them in a bid that fewer people can afford to own. Spain had a relatively high home ownership rate before the crisis but it has since come down.

Blackstone’s Bet

“We’re holding most of what we own and looking to rent it out for the foreseeable future,” said James Seppala, head of real estate for Europe at Blackstone. “There’s a meaningful increase in demand for rental residential around the world, including in Spain, driven by home ownership rates coming down.”

Private equity investors also backed a new breed of real estate developers that are bringing a different rigor to the industry. Companies such as Neinor and Aedas Homes S.A.U. are more tech-savvy when assessing markets, and emphasize industrial production techniques to improve efficiency. They’re behind a surge in licenses for new homes to 12,172 new homes in July, the highest monthly total in a decade.

But demand is uneven: Madrid is enjoying its most robust year of home construction since 2008 with an average of 2,151 licenses awarded per month in the first seven months of the year. In Segovia, just 27 minutes from Madrid on the state-run bullet train, an average of 25 homes licenses have been approved per month in 2018, compared with an average of 180 homes a decade earlier.

The volume of residential mortgages sold in Spain peaked in late 2005 before hitting a low in 2013. Since then they have gradually picked up, with 28,755 sold in August, a seven percent annual increase.

Velayos, chief executive officer at Neinor, said business is starting to pick up beyond Madrid and Barcelona to smaller cities and the coast. His company plans to hand over 4,000 homes by 2021, more than 12 times as many as in 2017. The biggest challenge has been getting licenses approved on time. Velayos had to cut his delivery target for 2019 by a third as often understaffed local councils cause bottlenecks in the production process.

More significantly, Spain’s real estate is now funded by investor’s equity and not credit, said Velayos. Neinor was bought by private equity firm Lonestar Capital Management LLC from Kutxabank SA in 2014 and went public in March 2017. Aedas is backed by Castlelake, another private equity investor, and was floated the same year. Metrovacesa SA, owned by Spain’s biggest banks, held an initial public offering earlier this year.

Shares of all three developers have declined this year at more than twice the rate of the local stock index, a reminder that the market’s recovery remains fragile, with higher interest rates and an economic slowdown on the horizon.

For the Bioclimatic City La Encina, that means it may take longer still until Alba gets new neighbors. Prices for half-finished chalets were slashed by half, according to residents. Some now sell for as little as 16,700 euros, half the cost of a mid-range car.

Alba doubts such cuts will lure buyers. Then again, that may not be a bad thing, he says in summing up the development’s advantages: “It’s very peaceful.”

Original story: Bloomberg (by Charlie Devereux)

Edited by: Carmel Drake

Venezuelans Lead Ranking of Most Active Foreign Residential Investors in Madrid

5 June 2018 – La Vanguardia

Venezuelan immigrants lead the ranking of home acquisitions by foreigners in the Spanish capital, according to data from Redpiso’s Research Service.

This data represents an increase of 10% with respect to the previous year and places investments by Venezuelan immigrants above those made by the Russians and Chinese, who were, until now, the nationalities that purchased the most homes.

The typical investor profile are people with a medium-high purchasing power, educated and employed, who have lived in the country for no more than three years.

Above all, they are buying homes in the areas of Chamartín, Hortaleza, Salamanca and Retiro.

The average cost per home amounts to around €565,000 and purchases are mainly happening in the second-hand housing market, “given that the supply of new build properties is very low and even more so in these areas”, said Redpiso.

In terms of the rental market, the average number of contracts increased by 35%, with the average spend on rent by Venezuelans amounting to €1,700 per month with three-year renewable contracts.

To explain the factors driving this growth, sources at Redpiso allude “to the mass arrival of Venezuelan immigrants who are coming to Spain due to the controversial socio-political situation in their country, as well as the limited and increasingly more expensive supply of rental homes in Madrid”.

Original story: La Vanguardia 

Translation: Carmel Drake

Oaktree Sells 49 Luxury Homes on Madrid’s Gran Vía

9 March 2018 – Eje Prime

Oaktree is successfully completing its luxury development on Madrid’s Gran Vía. The US fund has managed to sell the 49 homes that comprise the project, whose keys will be handed over at the end of 2018.

The good health of the residential sector in Spain, accompanied by the country’s period of economic boom, has allowed the fund to take full advantage of this promotion. Not in vain, the commercialisation of the building, located at number 68 Gran Vía, has reached prices of up to €10,000 per square metre, according to El Economista.

The consultancy firm Magnum&Partners has operated as the delegated promoter for this residential project, which first went on the market in September 2016, with prices as low as €6,000 per square metre, for properties without a parking space.

Due to demand, that figure has increased by 10%. The new homes in the renovated property will have surface areas of between 79 m2 and 247 m2. Moreover, the building will have a panoramic roof terrace with a swimming pool, as well as a gym.

The most expensive home in the building has been sold for an approximate price of €3 million. The tenants of the development, designed by the architecture studio Fenwick Iribarren, will be mostly Spanish, given that 87% of the buyers are nationals, and half of them are resident in Madrid.

Original story: Eje Prime 

Translation: Carmel Drake

Chinese Conglomerate HNA Wants to Sell its Stake in NH Hotels

19 January 2018 – El Mundo

The largest shareholder of NH Hotels, the Chinese conglomerate HNA, is considering the possibility of divesting its stake in the Spanish hotel group. It has engaged the entities JPMorgan and Benedetto Gartland to identify possible buyers for its 29.3% participation in the Spanish hotel chain.

The Chinese investor group has submitted this information to the National Securities and Markets Commission (CNMV), explaining that it has engaged the aforementioned entities “to review its shareholding position in the NH Hotel Group”, which it holds through its company Tangla Spain, “which includes the identification of possible buyers for its stake”.

It was only a week ago that the Board of NH unanimously rejected the merger proposed by the Barceló group. This possible sale could be driven by the need for liquidity but the rejection decision may have precipitated the move by the Chinese firm.

The Chinese investor group had entered NH in 2013 with an initial participation of 20% through the subscription of a capital increase amounting to €234.28 million, which it increased to 29.5% in November 2015, after purchasing the 8.33% stake that the entity Intesa Sanpaolo held in the listed hotel chain.

Nevertheless, the disagreements arose shortly after its entry into the Spanish group’s share capital. The purchase of Carlson Rezidor, a rival of the Spanish hotel group in certain markets, resulted in the exclusion of the Chinese company from NH’s Board due to a conflict of interest. The letters confirming these disagreements were made public and the parties even came to a head in the courts.

HNA needs to obtain liquidity to pay off a debt that it took out in 2015, after carrying out several acquisitions worth USD 40 billion (€32.65 billion). And in December, it announced its intention to sell assets worth US 6 billion (€4.897 billion).

By the middle of November, the Asian conglomerate had sold 1.14% of its share capital in the Spanish hotel group, which meant divesting 4 million shares, whereby obtaining some liquidity.

Based on the current composition of NH’s shareholders, HNA is followed by the investment fund Oceanwood, with 12%, and the Hesperia Investor Group, with 9%.

Original story: El Mundo (by Silvia Fernández)

Translation: Carmel Drake

AGV: Almost One Third Of Madrid’s Citizens Think More New Homes Are Required

20 November 2017 – Observatorio Inmobiliario

Almost one third of Madrid’s citizens believe that there is not sufficient housing in the city to meets their needs in terms of prices and features. This perception increases as the respondents’ annual salary and age decrease. Similarly, more than half of future buyers believe that there is not sufficient supply to allow them to choose the most appropriate home and almost 45% think that more housing needs to be built. Those are some of the findings of a study conducted by the Association of Housing Managers (‘Asociación de Gestoras de Viviendas’ or AGV) amongst citizens of the capital, which reveals the needs of house buyers in the city of Madrid.

The people surveyed, of whom 3 out of 4 were buyers aged between 31 and 39, revealed that buying a home or apartment in a building is their preferred option. The vast majority confirmed that they would choose to buy a private home (rather than a subsidised property). In fact, almost 80% stated that they are most tempted by that type of home; 90.5% of them are aged 40 or over (86.3%), compared with the younger population, where only 56.7% said that they would be able to buy a private home.

The youngest people who do not own their current homes stated that they will invest less than €160,000 in the purchase of a home as they cannot afford more expensive properties. Moreover, only 11% of the respondents said that they would spend a maximum of €300,000 to buy a property in Madrid.

Price and location are the top priorities

Both price and location stood out as the main factors to take into account when it comes to buying a home. More than half of Madrilenians (63.4%) rank price as one of the most important considerations, along with the characteristics of the home. The study confirmed that price and the lack of help or tax incentives are the main obstacles preventing the majority of Madrileños from affording to buy a new home.

In terms of the housing market, potential future house buyers claim to be those who have planned their savings (29.6%), have good prospects in terms of employment (23.9%), and monthly earnings that allow them to afford the expense (35.7%). Of the latter, the population aged between 31 and 39 stands out, with annual earnings of more than €36,000.

Limited information and a sensation of complexity when accessing social housing

The survey confirmed the existence of a firm interest in social housing properties in the city of Madrid, even though only 30% of those surveyed said that they were informed about subsidised housing, and 61% consider that the application procedures are too complex. In fact, almost 60% of women and 63.3% of young people (under 30) consider that they will have to go down this route.

Juan José Perucho Rodríguez, President of AGV, declared that “we are facing a critical situation given that demand from citizens is clear and the situation is not adapting to reflect what is happening in Madrid. The construction of social housing properties is vital for citizens, who have seen their purchasing power diminish, to be able to afford to buy a home. In this sense, we think that starting to discuss the option of creating more homes is necessary to cover the needs of the citizens who demand them”.

Original story: Observatorio Inmobiliario

Translation: Carmel Drake

INE: House Sales Rose By 26.9% In March

22 May 2017 – El Confidencial

House sales rose by 26.9% in March with respect to the same month in 2016, to reach 40,461 operations, the highest figure since February 2011, according to figures compiled by Spain’s National Institute of Statistics (INE).

This increase, which marks 14 consecutive months of YoY increases, is much higher than the rise recorded in February when operations increased by just 1.2% in YoY terms.

Transactions involving second-hand homes rose by 28.3% in March with respect to the same month in 2016, to reach 33,100, a level not seen since September 2007. Meanwhile, sales of new build properties rose by 21.2% in YoY terms, to reach 7,361 transactions, the highest figure since February 2016.

89.8% of the homes sold during the third month of the year were private (unsubsidised) properties and 10.2% were protected (social housing). Sales of private homes rose by 27.6% in March in YoY terms, to reach 36,332 transactions, meanwhile, operations involving social housing properties grew by 21.5%, to 4,129 transactions.

In monthly terms (March compared with February), house sales soared, by 13.6%, their highest increase in the month of March for at least five years.

In March, the greatest number of house sales per 100,000 inhabitants by region was recorded in the Community of Valencia (150), followed by the Balearic Islands (148) and Andalucía (121). The latter was also the autonomous region where the most (absolute) house sales were recorded during the third month of the year, with 7,976 transactions, followed by Cataluña (6,832), the Community of Valencia (5,854) and Madrid (5,684).

Original story: El Confidencial 

Translation: Carmel Drake

Tinsa: House Prices Rose By 6.1% YoY In Large Cities In April

10 May 2017 – Expansión

House prices are continuing to rise sharply, boosted by an acceleration in the large cities and in the Balearic and Canary Islands, according to the latest estimates from the appraisal company Tinsa. Specifically, the price per square metre of properties rose by 2% in April with respect to the same month last year, according to figures published yesterday.

Although those figures are seven-tenths lower than those registered in March for the country as a whole, we cannot speak of a slowdown, given that the general trend over the last few years has been increasingly bullish. Moreover, the data also reveals a growing acceleration in several key markets, such as the large cities, where prices rose by 6.1%, and the Balearic and Canary Islands, where property prices rose by 4%.

In this way, the rise in house prices in Spain’s provincial capitals and large cities has accelerated by six-tenths with respect to the same month last year, to reach its highest rate since the outbreak of the crisis. This increase is being spearheaded by some of the prime areas of Madrid and Barcelona, where supply is constrained and demand is rocketing. Nevertheless, over the last few months, the price rises have been spreading to more and more neighbourhoods, given the strong buyer pressure in the most sought-after areas.

Meanwhile, property prices in the Balearic and Canary Islands are rising at a rate of 4%, driven by two main factors. On the one hand, the high level of demand from overseas buyers. On the other hand, the purchase of homes as investments, given that owners can rent them out easily for short-stays for most of the year, which raises their yields. Prices in these regions have fallen by 27.8% since 2007, i.e. by one-third less than the average.

On the other hand, this situation contrasts with the weakness in house prices along the Mediterranean Coast, in metropolitan areas and small towns, where there the stock of homes for sale is greater and demand is lower. (…).

Two speeds

(…). By way of illustration, house prices in the Mediterranean region are still 46% lower than their peak levels of 2007. (…).

In metropolitan areas, prices are still falling, with a decrease in property prices of 2.6%. That data also represents a slowdown of more than two points with respect to last month and is a kick in the teeth for a market that has seen its price plummet by 45.9% since the real estate bubble burst. The reason is precisely due to the fact that the crash in the market made house prices in the centre of large cities more affordable, which meant that most buyers did not have to move tens of kilometres away to buy a home.

Original story: Expansión (by P. Cerezal)

Translation: Carmel Drake

Europe’s Finance Ministers Consider Creating An EU Bad Bank

4 April 2017 – Expansión

According to working documents to which Efe has had access, the European Union’s (EU) Economic and Finance Ministers will meet on Friday to discuss the possibility of creating a bad bank in order to offload the non-performing loans accumulated by European banks in the market.

The text, drawn up by Malta in its role as the current Presidency of the EU, will serve as a basis for reflecting on the actions that may be adopted at the EU level, to reduce the burden of non-performing loans on European entities, during an informal meeting of the ministers in Malta.

These non-recoverable loans account for 5.4% of the total loan portfolio and are worth more than €1 billion (equivalent to more than 7% of the EU’s GDP).

In addition to the creation of an asset management company, widely known as a bad bank, consideration will also be given to the option of creating a secondary market in the EU for these types of loans, to improve supervision, strengthen insolvency regimes and tackle the accumulation of pending court cases.

“Experience suggests that the creation of asset management companies can help to tackle the accumulation of non-performing loans (NPL) regardless of their capital structure (public, private or mixed)”, said the document.

The Maltese Presidency highlighted that the establishment of this company “would very likely” represent a boost to the secondary market for these assets, by creating a transaction history, and at the same time, grouping together these loans would reduce the information gap between buyers and sellers and would facilitate access to the market for smaller banks.

Nevertheless, the Presidency explained that in the past, there have been cases in which these bad banks have served only as a “cushion for removing NPLs from the banks’ balance sheets” and that there have only been “limited sales” in the market.

As a result, it advocates a hypothetical bad bank that fulfils certain “success factors”, such as suitable governance agreements and proactive strategies to maximise the value of its portfolio.

The current EU Presidency considers that this measure should be accompanied by a “substantial boost” in investment in impaired assets in the EU, by private and public investors alike.

In this sense, it underlines that the creation of this company should be executed “in line” with EU rules regarding bank resolution and State aid.

Meanwhile, the Economic and Finance Ministers will analyse the options for boosting a secondary market in which these loans could be offloaded, which is currently being hampered by a lack of reliable information about the quality of the assets and differences in information between sellers and buyers.

In this sense, it opens the door to the creation of “state-sponsored” platforms for transactions involving non-performing loans.

Original story: Expansión

Translation: Carmel Drake

ST: House Prices Will Rise By 3% In 2017

18 January 2017 – Cinco Días

House prices will grow by 3% on average this year, driven by the improvement in the economy and employment, but also by the pseudo boom that is happening in the rental sector, in particular in large cities. That is according to Sociedad de Tasación, one of the largest appraisal companies in the sector.

The year that has just started will continue to be favourable in general terms for a real estate sector that, in the words of the Director General of Sociedad de Tasación, Juan Fernández-Aceytuno, is “recovering its sense of judgement”.

Thus, the volume of transactions will continue to grow, the rate of construction will intensify and more mortgages will be signed (although that figure will always fall below the number of house sales); and all of that means that house prices will end the year 3% higher, on average. Nevertheless, Sociedad de Tasación warns against certain risks and key factors that will determine the extent of this improvement in the real estate sector.

The first is what is happening in the rental market. Fernández-Aceytuno again highlighted the large group of potential buyers, such as young people aged between 25 and 35 years old, who are unable to buy a home because of their low wages and because of the precariousness associated with the majority of the new jobs that are being created. Since those people are not buying, many are choosing to rent, which has caused demand in the rental market to soar, along with rental prices. Sociedad de Tasación believes that if no response is given to this insolvent demand, rental prices will continue to rise and that will, in turn, drive up the prices of homes up for sale.

The Director General recalled that the average yield on rental properties in large cities stands at around 6.1% at the moment, which means that the increase in real estate prices in the major cities will be higher than the 3% forecast for the country as a whole.

Moderate pace

Other decisive factors, in addition to the improvement in employment, will be everything relating to financing. The new accounting standards, which the banks must comply with this year, together with the cost of recent court rulings, such as the judgement regarding floor clauses, and the forecast increase in interest rates may have an impact on the conditions for accessing credit over the medium term, which will determine the behaviour of much of the demand.

In any case, the good news, according to Socidad de Tasación, is not only that the main indicators in the sector are going to continue to stabilise, but also that they are doing so in a much more balanced way than in the past. In this sense, the firm gave the example that house prices are growing at more moderate rates now than they did during the previous boom, with rises in line with the number of new Social Security members. Moreover, it highlighted that land prices have not soared by more than house prices, which was also common during the early 2000s.

What’s more, property developers have not started to build homes in an uncontrolled way, even despite the expectation that more new homes are going to be sold. A study compiled by the appraisal company shows that the supply of new homes in Madrid and Barcelona is actually scarce, which means that it will run out within 10 months in the capital and within 14 months in Barcelona. Finally, it describes the rate of property construction along the coast as “very reasonable”.

Original story: Cinco Días (Raquel Díaz Guijarro)

Translation: Carmel Drake